Wind in the sails: As the government aims to make more use of renewable sources, wind is gaining more attention

Egypt’s wind resources are some of the most comprehensively studied in the region. The coastline of the Gulf of Suez in particular was investigated in great detail between 1996 and 2003 in a joint effort by the Danish RISO laboratories and the Egyptian Meteorological Authority (EMA), the result of which was the Wind Atlas for the Gulf of Suez West Coast. In 2005 the atlas was expanded to cover the entire land area of Egypt, setting out a persuasive case for the adoption of wind farm technology for the country: the atlas shows that the potential for wind power is immense in areas such as the Gulf of Suez, where the average wind speed reaches 10.5 metres per second, as well as in the Nile banks in the Eastern and Western deserts and isolated locations on the Sinai peninsula.

The case for developing wind farms in Egypt has been further strengthened by a number of pilots and demonstrations over the past quarter century. In 1988 the nation’s first wind farm was established in cooperation with Denmark’s Wincon at Ras Ghareb on the Red Sea Coast, and consisted of four wind towers producing a modest 100 KW each. Between 1993 and 1996 a second, more ambitious, project was developed at near the city of Hurghada, which utilised 42 wind towers of various types and generating capacities, including some manufactured by Germany’s Ventis and Denmark’s Nordtank. Although the project’s generating capacity never exceeded 5.4 MW, its successful interconnection with the local electricity grid and the fact that some components – including some blades and towers – were manufactured in Egypt made it an important milestone for the wind power industry.

WIND TODAY: With the case for wind energy in Egypt firmly established, the development of the nation’s first commercial-scale wind farm started in 2001 at Zafarana, on the Gulf of Suez Coast. Since then it has grown in several phases to include 700 turbines of varying models (600 KW, 660 KW and 850 KW) to reach a total installed capacity of 545 MW as of June 2012. Zafarana’s performance over the 2011/12 financial year demonstrates the utility of Egypt’s wind resource: an average wind speed of 7.1 metres per second allowed it to attain an availability factor of 97.6% and a capacity factor of 32.6%, resulting in an energy production of 1.5bn KWh.

THE STRATEGY: Egypt’s renewable energy policy is already at an advanced stage. In February 2008 the Supreme Council for Energy approved its strategy for electricity generation based on diversifying energy production sources, rationalising the use of energy and expanding the renewable component. It also set a renewable target of 20% of total production by 2020, of which the share of grid-connected wind power will be in the region of 12%, or around 7200 MW.

Central to the government strategy is its desire to move from a currently government-owned wind component to a public-private ownership mix. According to the plan, the New and Renewable Energy Authority (NREA) will implement a third of the targeted capacity in cooperation with international financing institutions such as the African Development Bank and the World Bank, while the remaining two-thirds will be developed by the private sector through a build-own-operate (BOO) model deployed in three phases: tendering; the creation of a feed-in tariff system; and the construction and operation phase.

While a number of wind projects developed in accordance with the government’s strategy are already at an advanced stage, more strategic input will soon emerge as a result of cooperation from the German government-owned development bank, KfW. Together, the government and KfW will prepare the Combined Renewable Energy Master Plan for Egypt (CREMP). Financed by the European Commission, the plan will address the question of large-scale, grid-connected generation for renewables, concentrating on wind and solar, and is expected to be finalised in 2013.

THE PROJECTS: Egypt’s wind energy sector is in the midst of a significant phase of expansion, with numerous government and private sector projects currently in the process of being implemented. The NREA is presently overseeing seven projects with a combined generating capacity of 1340 MW, which it intends to develop with a number of international partners. In 2008 an agreement signed between the Egyptian and Spanish governments laid the groundwork for a 120-MW project partly funded by a €120m loan on the condition that the tender be tied to the Spanish market only. Final approval came from the Egyptian side in May 2012, and in November that year the Spanish government appointed an expert to assist the NREA to prepare tender documents.

A similar loan agreement, without the geographical limitation on the tender process, has been signed with the government of Japan with relation to a 220-MW facility Gabal El Zayt, and as of January 2013 bidders have already submitted pre-qualification proposals. Japan is also undertaking a feasibility study and environmental impact assessment for a 200-MW facility west of the Nile. In July 2011 a contract was signed with a Spanish company for the first phase of a 200-MW project in Gulf Al Zayt, which the NREA is developing with cooperation with Germany’s KfW, the European Investment Bank and the European Commission. The Egyptian government has also secured a grant from the Neighbourhood Investment Facility and financing from KfW, the French Development Agency and the European Union for a 200-MW farm in the Gulf of Suez. All of the government-led projects share a number of features: modest capacities ranging from 200 to 220 MW, the utilisation of external funding and expertise, and completion dates between 2014 and 2016.

The private sector projects currently being implemented in Egypt promise to bring larger capacity additions to the wind energy total. In 2013 the NREA plans to issue the prequalification documents of the competitive bid for a 500-MW wind farm to be developed on a BOO basis in the Gulf of Suez area. The NREA has also announced that it will make land available on a usufruct basis in the same area for a 600-MW wind farm project. Two smaller private sector projects are also being developed in the Gulf of Suez area. The first is a 250-MW BOO facility already at an advanced stage and due for completion in 2015. The final privately funded project in the area is the result of another land usufruct agreement signed in 2012; the establishment of a wind farm by Italgen that will feed the nearby cement factories owned by the Suez Cement Company. The farm is due to commence operations in 2014.

LONG-TERM BENEFITS: The long-term benefits promised by the continued development of the nation’s young wind energy sector are manifold. Studies show that the industry may have a turnover of LE80bn ($11.4bn) by 2020. Crucially for a country that relies heavily on tourism, the benefits to the environment are also significant. With its planned 7200-MW wind energy installed, Egypt could expect to save 4.25m tonnes of oil equivalent of feedstock and reduce emissions of carbon dioxide by around 10m tonnes, according to NREA data. Additionally, growth in the sector could help address the country’s unemployment issues with 75,000 direct jobs by 2020, according to some estimates.

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The Report: Egypt 2013

Energy chapter from The Report: Egypt 2013

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